Ridiculous or not? “Low cost” airlines that cost more

By Christopher Elliott | October 12, 2011When David Simon wanted to fly from Milwaukee to Fort Lauderdale, Fla., he assumed “low cost” airline Southwest would offer the lowest fare.

Then he did the math.

A roundtrip flight on Southwest – including two “free” bags – cost $334.
He checked US Airways’ fares. Even after he factored in $25 for the first checked bag, $35 for the second and $60 for a premium seat reservation, it still came to $227 – more than $100 less than Southwest.

“It’s a reason to hate when an airline says ‘bags fly free,’ says Simon, who is an occasional Southwest passenger and like other air travelers, automatically assumes a “low cost” carrier actually offers the lowest fares.

His experience – which, by the way, is hardly unusual – raises an interesting question: Are our assumptions about airfares all wrong?

Let’s get one misconception out of the way first. “Low cost” carriers were never really about fares; they were more about the airline’s own operating costs. Airlines started after deregulation were inevitably called “low cost” or “discount” because their expenses were lower than those of the “legacy” airlines that existed before deregulation.

Fares are set by expensive machines that predict supply and demand, but also by yield managers who factor in issues that an algorithm can’t, such as customer perception. And if an airline like Southwest is perceived to have a better fare, then it can often name its own ticket prices.

It helps that pretty much the only place you can buy a Southwest Airlines ticket is through Southwest.com, which makes a side-by-side comparison with a competitor difficult. Some bargain-hunters wouldn’t even bother to shop around.

Perhaps they should.

Lissa Hoeprich did when she was looking for flights to Portland, Maine. Usually she finds a cheap fare on Southwest to Manchester, NH, and then rents a car. But she says she was shocked when she discovered she could fly directly to Portland and save $140 on US Airways.

“We didn’t need to check luggage, but even if we had, that would have been much cheaper than the Southwest tickets,” she says.

At best, this is a cautionary tale about labels in the airline business. When anyone refers to themselves as “discount” or “low cost” – be careful. (And if they have the audacity to call themselves “ultra” low fare, be extra careful.)

Labels can be problematic, if not misleading, and just because you call yourself something doesn’t make it so.

But at worst, this is a case study of several airlines leveraging a well-earned reputation for low fares to their short-term advantage. Look, I love the “bags fly free” ads as much as the next airline passenger, as much as I’m enamored of JetBlue’s stylish “you above all” advertising campaign that evokes the Pan Am era of air travel.

But if those ads make us turn a blind eye to the true cost of air travel, where does that leave us? Paying higher fares, often without knowing it, that’s where.

I think that’s unfortunate.

I’d rather knowingly pay a reasonable premium for the superior customer service offered by the likes of JetBlue and Southwest than be duped into shelling out more by a slick ad campaign. Or by my own ignorance.

Christopher Elliott is an author, journalist and consumer advocate. You can read more about him on his personal website or contact him at *protected email*. Got a question or comment? You can post it on the new forum.

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